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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10640
Experience:  30 years of corporate, litigation and international law
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I was a former mortgage broker Lenders (Wells Fargo,

Customer Question

I was a former mortgage broker for 250 Lenders (Wells Fargo, Countrywide, etc). My goal is to start a private hard money lending corporation for RE Investors funded by non accredited investors using debt instruments/ promissory notes.
Two questions:
1. According to the SEC or laws in general, is there a limit to how much funding my corporation can raise through loans from unaccredited investors?
2. Is there a limit to the number of unaccredited investors my corporation can accept loans from?
Submitted: 1 year ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 1 year ago.

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

If you plan to file a registration statement you can raise unlimited funds from such investors. However, if you are going to raise funds through an exemption from the registration requirements such as through a private place, then you will generally be limited to 35. There is not a specific limit on the amount that can be raised but generally given the resources of unaccredited investors, large amounts would not be suitable for an individual investor. Promissory notes are securities so they have to comply with the securities laws. You may want to look at some of the less costly forms of registration such as Reg. A registrations and intrastate offering exemptions.

I do not know how much you want to raise but the ranges on the safe harbor provisions of Reg. D for private placements is $1 million and you can have unlimited unaccredited investors, to $5 million with not more than 35 unaccredited investors. You can do unlimited also with the same 35 unaccredited investors but that will undoubtedly involve accredited investors.

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